Marubeni : Q&A of Reorganization of the North American Grain Business and Agri-Input Business has been uploaded.

Condensed Transcript of Question and Answer Session

IR Meeting on Reorganization of the North American Grain Business and Agri-Input Business

Date:	January 26, 2022 (Wednesday)
Format:	Conference Call
Those Present:	Akira Terakawa,	Senior Executive Vice President,
		CEO of Food, Agriculture & Chemicals Group
	Takayuki Furuya,	Managing Executive Officer, CFO

Disclaimer Regarding Forward Looking Statements and Original Language

This material contains forward‐looking statements about the future performance, events or management plans of Marubeni Corporation and its Group companies (the Company) based on the available information, certain assumptions and expectations at the point of disclosure, of which many are beyond the Company's control. These are subject to a number of risks, uncertainties and factors, including, but not limited to, economic and financial conditions, factors that may affect the level of demand and financial performances of the major industries and customers we serve, interest rates and currency fluctuations, availability and cost of funding, fluctuations in commodity and materials prices, political turmoil in certain countries and regions, litigation claims, changes in laws, regulations and tax rules, and other factors. Actual results, performances and achievements may differ materially from those described explicitly or implicitly in the relevant forward‐looking statements.

The Company has no responsibility for any possible damages arising from the use of information on this material, nor does the Company have any obligation to update these statements, information, future events or otherwise.

This material is an English language translation of the materials originally written in Japanese. In case of discrepancies, the Japanese version is authoritative and universally valid.

<1st Questioner>

Whether gain on sale (multiple tens of billions of yen) is small given the ¥300-400 billion estimate for recovery of invested capital, including recovery of Group funding provided internally to Gavilon

CFO Furuya: Regarding internal Group funding, working capital fluctuates significantly depending on the season. After final adjustment of the selling price according to working capital and other items, a gain on sale in multiple tens of billions of yen is in line with our expectations.

Whether annual profit of the Agri Business Division shed with the sale of Gavilon's grain business will be made up for by other businesses

GCEO Terakawa: Gavilon's fertilizer business has posted particularly strong results so far this year and should be able to maintain typical profit levels, which we believe to be in the range of ¥3-4 billion. The reorganization, which involves the transfer of part of the equity interest of a JV grain export terminal business on the U.S. West Coast and grain elevators in the northern U.S. to Columbia Grain International (CGI), will strengthen existing businesses, so we believe it will be very beneficial overall.

CFO Furuya: We previously stated that Gavilon's grain business can normally be expected to generate profit of about ¥8-10 billion, and its results for the first half of this fiscal year have been progressing steadily. The amount after deducting expenses incurred by the head office as well as interest payments is the consolidated profit in the Gavilon grain business. We will retain the eight grain elevators in the northern U.S. and part of the grain export operations on the West Coast, and sell off the rest of the Gavilon grain business, but we will be able to make up the profit lost from the sale with Gavilon's fertilizer business and the growth of CGI.

<2nd Questioner>

Products handled by the eight grain elevators to be transferred to CGI in the northern U.S. from Gavilon's grain business, the effect of that transfer on CGI, and future growth opportunities in the legume business at CGI

GCEO Terakawa: The eight grain elevators to be transferred are all the elevators that Gavilon's grain business owns in the northern U.S. They handle soybeans and corn in addition to wheat. Therefore, CGI, which currently specializes in handling wheat for export to Japan, will also be able to expand soybeans and corn as a result of the reorganization.

CGI is also engaged in legume origination and sales, and plans to subdivide and sell legumes via e-commerce. It is also currently eyeing the downstream area of plant-based proteins as a

substitute for animal proteins. We cannot talk about it in any detail yet, but CGI is conducting multiple feasibility studies.

<3rd Questioner>Summary of the Gavilon acquisition and the knowledge that Marubeni gained

GCEO Terakawa: We acquired Gavilon in 2013. In terms of the acquisition, there were certainly some unexpected changes with hindsight that conditions in the grain origination business in the U.S. became severe, with falling grain prices and the trend toward on-farm storage. Moreover, our largest regret is that the acquisition price was found to be too expensive after the acquisition. The high acquisition cost was also the reason for the cumulative impairment losses of ¥120 billion previously recorded, although Gavilon's business itself never fell into the red.

As for knowledge, we sent a considerable number of employees from Japan to Gavilon, and they were able to acquire a practical understanding of how grain origination operations work and where the sources of profit are.

Gavilon's business model is a stock-type model of storing grains over the long term, and distributing them to the most suitable buyer at the optimal time. On the other hand, the growth strategy we had in mind at the time of the acquisition was a market-driven approach of expanding trade to the worldwide market. Because of that, after the acquisition, it turned out to be difficult to match Gavilon's business model, which was more purchase-oriented, with our strategy. However, we learned a lot through this business, including how to access farmers. We have also been considering ways to utilize digital transformation for efficient silo operation, for example, and such initiatives will be useful in managing the grain elevators we will retain in the northern U.S.

Plan on using the ¥300-400 billion in funds from the sale

CFO Furuya: We have no plans to appropriate the funds recovered to any specific items. Basically, we seek to increase our corporate value over the medium and long term, taking overall cash flow into consideration. To that end, as this sale will enhance and strengthen our financial foundation, we will be able to consider better balance of allocating capital to growth investments, internal capital reserves and shareholder returns going forward.

We want to strengthen growth investments in particular. Since there are highly profitable areas where the Marubeni Group is very competitive in existing businesses and peripheral fields, we will make focused investments in those areas. At the same time, we will continue to make carefully selected new investments based on our business policies.

Selling off Gavilon's grain business will further strengthen our financial foundation, so we will have more freedom in capital allocation, including for growth investments and shareholder returns.

Amount of total assets and net assets of the assets to be sold

CFO Furuya: (Including assets we will continue to hold) Gavilon's grain business has total assets, including working capital, of approximately ¥500 billion.

Follow-up note:

The amount of net assets is not disclosed.

<4th Questioner>

Allocation of resources to achieve growth with high asset efficiency in the growth strategy of the grain business and agri-input business

GCEO Terakawa: The North American agri-input business is a core business with plenty of potential for further growth, and is a business area we are prioritizing. Helena and other Marubeni Group companies are deepening cooperation with Gavilon's fertilizer business, which is leading to expanded access to overseas manufacturers and the stable procurement of fertilizer. We will continue to make investments in the storage tanks and sites required for Gavilon's fertilizer business.

CFO Furuya: From an investment policy perspective, CAPEX and new investments such as acquisition of rivals at Helena and CAPEX in Gavilon's fertilizer business are producing results with high capital efficiency, so we will focus allocation of funds to them. We are also developing the agri-input retail business in Brazil. Our basic approach will be to generate growth through focused expansion in business areas where we have a competitive advantage and track record.

Future direction of Marubeni's global grain trading business

GCEO Terakawa: Global grain trading has been shrinking for four or five years. Food Division-II sales have declined by around ¥1 trillion in the last five years, but this is because we discontinued unprofitable transactions and transactions with risks. On the other hand, Food Division-II profit has been rising. In the grain business, we plan to increase our presence in customer-oriented trading businesses, including business models connected to downstream sectors and the livestock feed business in Japan. To do this, we have made organizational changes in the Food segment, and the livestock business and grain business are now under one division-FoodDivision-II.

We intend to pursue profit by making transactions with the trade flow in mind, rather than chasing volume. To that end, we have taken another step forward by formulating a basic strategy of developing downstream businesses where we can leverage CGI's strengths in legumes and other plant-based proteins.

<5th Questioner>

Future scale of total assets and level of ROA in Agri Business Division

GCEO Terakawa: The investment capital we expect to recover with this sale is in the range of

¥300-400 billion, and total assets will decrease by about ¥500 billion. Major assets remaining in the Agri Business Division will include Helena, Gavilon's fertilizer business and CGI. In addition, the Agri Business Division also conducts business in Japan and other countries, and will still have those assets. Using these remaining assets, we will firmly boost capital efficiency.

The ROA of the Gavilon grain business was low compared with the Group-wide average, so the sale will increase the capital efficiency of both the Agri Business Division and the Group as a whole.

<6th Questioner>

Background and reasoning behind decision to carry out sale and reorganization at this time GCEO Terakawa: We had been considering various possibilities for the timing of the sale. Recently, the value of Gavilon's grain business has come to be well recognized. In addition, current conditions in the grain market are good, so we thought now was a favorable time for the sale. Given the high volatility of the grain market, we felt this opportunity was too good to miss.

Difference in profitability of assets of Gavilon's grain business that will be sold and those that Marubeni will retain

GCEO Terakawa: It is difficult to state the profitability of individual assets in the grain business. Increasing arbitrage opportunities by expanding the portfolio, such as by being involved in the entire process of trade or being capable of grain origination from various sources, is a factor that can raise earnings. With the reorganization, we are bringing together operations in the northern U.S. in a way that will leave us owning assets throughout the trading flow from origination to export. We believe we can secure a certain level of asset efficiency not because we sell to various customers, but because we kept businesses that will surely lead to trading opportunities.